BOE MPC: MPC Majority See Rate Hike Likely 'Comingh Months'>

-Votes 7-2 For Unchanged Bank Rate; Saunders, McCafferty For 25bps Hike  

     By David Robinson

     LONDON (MNI) - The Bank of England Monetary Policy Committee voted 

seven-to-two to keep Bank Rate unchanged at 0.25% at its September 

meeting but the majority warned that if things evolved as the Bank 

expected policy was likely to be tightened in coming months.

     The September minutes were a sharp departure from the August ones, 

with the MPC adding to its statement that policy may need to be 

tightened by more than markets were pricing-in to include a warning that 

the hike could also come sooner.

     The MPC is divided over the idea that tightening may be needed 

soon, with the statement that more tightening could be required 

than markets expected unanimously backed but with only a majority 

supporting the first hike could arrive fairly shortly.

     "A majority of MPC members judged that if the economy continued to 

follow a path consistent with prospect of a continued erosion of slack 

... some withdrawal of monetary stimulus was likely to be appropriate 

over the coming months in order to return inflation sustainably to 

target," the minutes said,    

     Only Michael Saunders and Ian McCafferty voted for a hike, with 

both of these having backed tightening at the previous two meetings. 

Newcomers Silvana Tenreyro and David Ramsden supported unchanged 

policy, with the seven-to-two vote in line with analysts' unanimous

forecast. 

     "If the economy were to follow a path broadly consistent with the 

August (Inflation Report) central projection then monetary policy could 

need to be tightened by a somewhat greater extent over the forecast 

period than current market expectations," the MPC minutes said.

     As markets had brought forward the timing of the first hike to 

around May next year the minutes are supportive of even earlier 

tightening than this and more increases along the curve. 

     London Bureau; e-mail: david.robinson@marketnews.com 

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